UK retail sales recover from fall, but July seen tough - CBI

LONDON (Reuters) - British shops had a better June than economists expected but retailers are their most downbeat about the month ahead since September last year, a survey showed on Tuesday, underscoring how cautious shoppers remain as inflation rises.

The Confederation of British Industry said its monthly retail sales balance rose to +12 in June, stronger than a median forecast of +2 in a Reuters poll of economists.

The balance had slumped to a four-month low of +2 in May.

Expectations for July fell to +3, matching a low last hit in September.

"The start of summer has seen shoppers hit the high street, lifting sales - if only modestly," Anna Leach, the CBI's head of economic intelligence, said.

"However, there's no getting away from the fact that life is getting tougher, with retailers clearly cautious over the near-term outlook," she said.

The CBI said sales were broadly in line with seasonal norms.

A rise in inflation to nearly 3 percent and a slowing of wage growth took some of the momentum out of consumer demand and the broader economy in early 2017.

A survey of consumer confidence published earlier on Tuesday showed households turned more downbeat after Britain's messy election outcome and the latest signs of a weakening of the housing market.

The Bank of England, whose interest-rate setters split 5-3 this month on the need to raise borrowing costs to see off a rise in inflation, is waiting to see how consumers respond to the political uncertainty caused by Prime Minister Theresa May's failure to win a parliamentary majority.

(Reporting by William Schomberg, editing by Andy Bruce)